A person’s financial needs are defined by the way he spends or saves money. There could be times when a person may need some help with money to recover his previous debts or to make his/her current situation better. Loans are an act of giving out a sum of money to a person with the expectation that it will be returned with an interest.
What is a personal loan?
A personal loan is a loan that helps you with meeting your individual financial needs. While getting a personal loan, you do not need to provide hypothecation or collateral to the lender. It gives you the flexibility to use funds the way you want to. It could be for personal affairs like a wedding, traveling, home renovation, medical crisis, paying a debt, purchasing property, etc.
It is not always plausible for a person to have handy cash every time they are in need. Sometimes you may feel the lack of it, and it is quite natural to put yourself under pressure in these trying times. For this reason, almost all the banks provide the option of personal loans which do not ask you the criteria of its spending until you can repay the amount in the given time. Borrowing money from a bank as loans are much more comfortable than a friend or acquaintance.
Features of a personal loan
- A personal loan is entirely hassle-free. You do not need to use your assets as a guarantee while applying for it.
- They generally have a fixed interest rate
- The term period for a personal loan is for a shorter period. Most banks offer a tenure of three years to maximum five years.
- The amount of the personal loans depends upon the person’s ability to pay its creditors.
- A personal loan requires very minimal paperwork if compared to other investments.
- Even repaying the loan is more comfortable than the other credits. You can easily compensate it with the help of EMIs, cheques or online payments.
Types of personal loans
Although there is no fixed limit to what a person should use the credit for, there are few popular types of personal loan that people can use their money in.
Festival loans: As the name suggests, this loan is offered to take care of your festive needs financially. These loans a limited borrowing but the interest rate on these loans is quite low so that the lack of liquid cash in your hand cannot ruin your festive mood.
Wedding loans: This loan is for the people who need monetary help to deal with the expense of financing a wedding. The money from this one could be used in all the significant costs that are necessary for covering a wedding. The interest rate of this loan fluctuates with the coming of the wedding season as compared to the off-season.
Vacation loans: We all enjoy an occasional vacation with our loved ones. However, the strain of paying the bills and the travel expenses could make the whole experience sour for you. In this case, vacation loans come to the rescue. The amount of this loan depends on your credit-worthiness, your destination and the period of your vacation.
Home renovation loans: With the help of this loan you can repair and renovate your home. Mending a leaky roof, a broken door or building another floor to your house may cost you a lot and this loan helps you with covering your financial loopholes. It is also to be noted that this loan is exempted from the tax when you pay its interest.
Consumer durable loans: This type of loan is offered for the purchase of consumer durable items such as television, home appliances, gadgets, etc. The provided finance could be of 100% in this kind of loan.